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Living conditions, quality of life, sustainability
Martine Durand
OECD Chief Statistician and Director of Statistics
Latin-American Conference on Measuring Well-Being and Fostering the
Progress of Societies, Mexico City, 11-13 May 2011
Measuring Well-Being and Fostering
the Progress of Societies
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Outline of presentation
OECD‟s engagement in measuring
well-being and progress
Better Measures …
... For better policies...
... For better lives
Challenges ahead
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OECD’s engagement in
measuring well-being and
fostering the progress of
societies
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Questioning of official statistics
Growing gap between the image provided by official
statistics and people’s perceptions of their own
living conditions
Undermining public trust on official statistics, public
policies and the functioning of democratic processes
Partly, disconnect reflects over-reliance on GDP as
measuring rod for living standards and quality of life
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GDP is …
A good measure for monitoring macro-economic
activity
Needed for macro-economic policies,
Output and productivity, capacity utilisation
Competitiveness
Demand for jobs
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... but not a good metric of well-being
GDP is not a good measure of well-being because:
It includes economic activities that either reduce well-being
or that remedy the costs of economic growth
It does not very well reflect households‟ economic resources
It excludes many of the dimensions that matter for well-being
It does not inform on whether well-being can last over time
Thus:
GDP needs supplementing ... but not supplanting
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In many countries GDP grew faster than household
disposable income(1999-2009)
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
Household disposable income GDP
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Higher tides did not lift all boatsIncome inequality widened in ¾ of OECD countries
between mid-1980s and late 2000s
Source: Growing Unequal?, OECD 2008
-1.0
-0.5
0.0
0.5
1.0
1.5
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The OECD response ...
OECD has been leading the international
reflection on Measuring Progress for nearly 10
years
Launched the Istanbul Declaration and the
Global Project in partnership with other
organisations in 2007
Organised three World Forums: Palermo (2004),
Istanbul (2007), Busan (2009)
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... has met strong political support
President Sarkozy set up the Stiglitz-Sen-Fitoussi
Commission (2009)
EU Communication on “GDP and beyond” and
EU 2020 Agenda (2009 and 2010)
G20 Leaders statement in Pittsburgh and Toronto
(2009 and 2010)
Conclusions of OECD Ministerial Council (2010)
Many national initiatives in developed countries
(e.g. UK, Germany, Japan, Italy) and interest in
emerging countries (China, countries in LA region)
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Better measures...
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Framework of OECD work on well-being
In terms of focus: people’s well-being
individuals’ situation in each country rather than
macro-economic conditions of economies
different groups of the population, in addition to
average conditions
achievements, measured by outcome indicators, as
opposed to input or output indicators
both objective and subjective aspects of people‟s
well-being
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Framework of OECD work on well-being
In terms of scope : three broad domains
Material living conditions
Quality of life
Sustainability
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Framework of OECD work on well-being
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Material living conditions
Analysis of the differences between growth in GDP
and in household disposable income
Measuring households own-production of non-
market services
Better measuring inequalities in the distribution of
National Accounts households income
Developing standards for measuring households
wealth and framework for joint distribution of
households income, consumption and wealth
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Production of non-market services significantly
increases measures of average household income
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Quality of life
Objective indicators ...
e.g., life expectancy, infant mortality, employment rate of
women with children of compulsory age; educational
attainment; housing conditions, contact with others;
transparency of governance; air pollution; reported
homicides, etc...
... and subjective indicators
e.g. overall life satisfaction; feeling of insecurity;
satisfaction with quality of local environment, etc...
Developing guidelines for NSOs on how to
measure different aspects of subjective well-being
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Money is not all that counts
TUR
EST
HUN
ITA
ISR
PRT
GRC
IND
SVNESP
RUS
CZESVK
CHL
ZAF
OECD AverageDEU
FIN
BRA
CHE
CAN
KOR
USANZL
POL
LUX
BELFRA
AUS
IRL
MEX
AUT
GBR
CHN
SWE
NOR
NLD
IDN
JPN
ISL
DNK
4.0
4.5
5.0
5.5
6.0
6.5
7.0
7.5
8.0
0 10000 20000 30000 40000 50000 60000 70000 80000 90000
Life
-eva
luat
ions
GDP
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e.g. PISA cognitive skills of 15 years old students
reading scale
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Sustainability
Ensuring that current well-being can be sustained
over time from individuals to societal
concerns
Measuring sustainability requires looking at
investment in (and depreciation of) a broad
range of assets and at future productivity gains:
– (Relatively well) measured assets : Produced
capital; Financial capital
– Measurement challenges: Environmental capital;
Human capital; Intangible capital and social capital
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Environmental capital: water
abstractionsPer capita abstractions, mid to late 2000s
m3/capita/year
0
500
1000
1500
2000
2500
n.a
.
n.a
.n
.a.
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Human capital: a stock that is several times higher
than that of physical capital…
0
2
4
6
8
10
12
14
Human Capital/GDP Physical Capital /GDP
Monetary estimates of human capital and physical capital
as a share of GDP, 2006
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… and where investment is insufficient to offset
depreciation due to ageing in most OECD countries
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Intangible capital: firms‟ spending on new knowledge and on
organisational capital are important for future labour productivity
growth and income
Social capital: communities matter not only „here and now‟ but
also for development to last and ensure cohesive societies
structural component (social networks, civic participation)
normative component (notions of trust, reciprocity,
tolerance, understanding and respect for others)
OECD work to develop guidelines and prototype survey
questions
Other types of capital are also critical for
sustainability
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Better measures...
for better policies…
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Informing policy design and decision making
Measuring the various dimensions and factors of well-
being can help improve policies by:
Identifying emerging issues or that are not on the
radar screen of policy-makers
Allowing better understanding of the range of
factors driving well-being in particular domains
Assessing countries‟ comparative well-being
performances (benchmarking) and informing
strategies to remedy structural gaps
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Informing policy design and decision making
Measures need to:
be relevant for a broad range of societies but
also reflect national concerns and specific
development patterns
be relevant for designing evidence-based
policies
reflect the perspective of citizens, not only that
of governments
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Better measures...
for better policies…
... for better lives
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Towards a virtuous circle
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OECD Better Life Initiative
• OECD 50th Anniversary : Better Policies for Better
Lives
How’s Life? report ; Compendium of Well-being
Indicators; Your Better Life Index
• Continued dialogue with emerging and developing
countries on what matters for them and sharing
experience
4th OECD World Forum „Statistics, Knowledge and Policies, Delhi,
October 2012
Preparatory Regional Conferences in Latin America, Asia, Africa,
in 2011 and 2012
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Challenges ahead
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Challenges ahead
Agreement that measuring well-being and progress
should contribute to achieving better living
standards, equity, social cohesion, sustainability
and the implementation of the Millennium
Development Goals
But there is an important measurement agenda for
NSOs and international organisations to fill in
existing statistical gaps
On-going work is still experimental and will evolve
over time
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Challenges ahead
Endeavour is challenging for less developed
countries but this is a long-term goal and all
countries should contribute to shaping the
agenda
Today’s Conference is an important contribution in
helping set this concrete agenda for Latin America
and beyond
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What we measure shapes what we collectively strive to pursue.
What we pursue determines what we measure
Thank you for your attention